PSAC requests federal assistance for Alberta’s oil & gas service sector

3/16/2016

CALGARY, Alberta -- The Petroleum Services Association of Canada (PSAC) recently presented a proposal to the federal government that will put oil and gas services companies back to work while benefiting the environment. 

“We asked the government of Canada for $500 million in infrastructure funding for well decommissioning operations in Alberta that will create jobs, retain expertise and skills, and provide economic and environmental benefits,” said PSAC President and CEO Mark Salkeld. “It’s a win-win for all stakeholders involved.”

He added, “Our member companies—the leading services, supply and manufacturing companies within the upstream petroleum industry—do not typically ask for or want funding from government. They want competitive royalties, taxes and regulations so their customers the E&P companies can continue the responsible development of Canada’s valuable oil and gas resources while contributing billions of dollars to Canada’s GDP every year.”

But, these are not normal times. Investment by E&P companies dropped 40% in 2015 leading to drastically reduced activity levels, and more cuts are underway in 2016. The result is tens of thousands of oil and gas services workers have been laid off and many oilfield services companies already have or are in danger of closing down forever. Salkeld said, “That’s why it’s the perfect time to put our member companies and their people back to work while addressing a growing challenge.”

As of January 2016, Alberta had more than 75,000 inactive wells on record requiring downhole wellbore abandonment and surface reclamation. Assuming the average cost per well for acceptable well decommissioning ranges between $100,000 and $300,000, then the investment for all current inactive or suspended wells would range between $8 and $82 billion. Current industry cash flow for 2016 is estimated at $26.5 billion (ARC Financial Corp.). 

Salkeld says, “While we absolutely agree well decommissioning is the responsibility of the licensee, economic circumstances and steadily increasing costs due to ever-improving regulations are causing this work to be delayed or postponed and regular activity has almost come to a standstill. Well decommissioning will help keep the expertise and intellectual capital that we have worked so hard to find and develop in Alberta so we’re prepared when the turnaround comes.”

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